Retail regrowth

Rather than the traditional anchor tenant, retail centers are becoming more focused on entertainment, dining and fitness. The newly reconceptualized Paradise Valley Mall in Phoenix, AZ, developed by Red Development, is a prime example — anchored by Whole Foods, with diverse dining options, a Lifetime Fitness facility and integrated apartment living. Adaptive reuse of older strip malls is another evolving trend. Driven by their easy access, high-visibility locations, these spaces are being redesigned and repurposed for healthcare clinics, creative offices and more. These mixed-use retail and neighborhood spaces are blending office, leisure and residential living to create 18-hour environments. Most recently, The Ranch in Gilbert received its final approval with permitting and construction is ready to begin on the $1 billion project. It’s set to become Gilbert’s largest mixed-use development, integrating industrial, residential and commercial elements. 

Medical momentum

Demand and development of medical office buildings (MOB) is outperforming traditional office markets. This sector’s growth is driven primarily by three factors: (1) demographic shifts, (2) healthcare system expansions and (3) evolving patient care models. Arizona’s desirable climate continues to attract a growing, diverse population, which fuels the need for outpatient and specialty care facilities. Major hospital systems are also expanding their networks into suburban and emerging communities to increase patient accessibility. Micro hospitals are filling healthcare needs in smaller communities. Another trend in the MOB sector is the conversion of outdated retail or office space into healthcare facilities, like the Chandler Integrated Care Campus currently under construction. This approach, driven by highly visible redevelopment locations, offers cost savings and faster project delivery due to infrastructure and appropriate zoning. In comparison, ground-up builds often require a zoning change, government and neighborhood approval, and infrastructure necessities.

Manufacturing makes waves 

There’s a valley-wide industrial sector boom happening with advanced manufacturing investment from TSMC in the semiconductor space. Most recently, Apple announced its expansion and partnership deal with the Taiwan manufacturer, set to produce tens of millions of chips for Apple in Arizona, indicating that there are no signs of this boom slowing down anytime soon. Two other large economic drivers expanding their support for TSMC are ASML and Amkor Technology. Amkor partners with TSMC to provide advanced back-end packaging and test services in Arizona, and ASML supplies essential EUV lithography machines for TSMC’s front-end chip manufacturing.

Applied Materials also announced its $200 million investment plan for a Chandler facility, further bolstering the semiconductor manufacturing supply chain in the U.S. While these large-scale projects are dominating the headlines, there is also growing demand for smaller industrial spaces to serve local businesses and e-commerce operations. One solution to this demand is multi-tenant industrial parks and infill projects expanding throughout the Valley, like Gateway Quads in Mesa. 

Office market reimagined 

The office space market is experiencing a period of recalibration. Tenants are favoring class A office stock because of the newer, amenity-rich offerings they provide. Buildings on Tempe Town Lake are highly desirable, as well as the ever-popular Scottsdale and Midtown Phoenix too. When the building structure allows, outdated office buildings are either being repurposed or converted for residential living, self-storage or mixed-use. While remote work models persist, many players in the tech and biotech space are maintaining satellite hubs in the East Valley cities, such as Chandler and Mesa.

Build-to-rent (BTR) shakes up multifamily

Phoenix is a national leader in BTR developments, especially in the West Valley and Southeast Valley submarkets. The multifamily market is experiencing a surge due to new employment, favorable business environment for owners, proximity to California and a growing workforce demand. The influx of migration from California, the Midwest and other expensive states has outpaced supply. A dual-track approach is being utilized with luxury mid-rises populating downtown cores and more affordable units in suburban expansion areas.>

With the uptick in development across all these areas, Metro Phoenix is also experiencing major infrastructure upgrades with transportation and utility projects in full flow. Expansions of major roadways are making cities like Buckeye and the West Valley more accessible to commercial and industrial use. Transit-oriented development and extensions of the light rail system are driving growth in Tempe, Downtown Phoenix and South Phoenix, too.

As metro Phoenix continues to evolve, navigating the CRE landscape requires dedicated, local expertise with a deep understanding of shifting market dynamics. Opportunities are abundant across sectors, but knowing how and where to engage is key.

The team at Davis Commercial AZ has deep roots in The Valley with decades of experience representing clients across retail, office, industrial and investment sectors. Due to our strong relationships with key players in individual municipalities, Davis Commercial AZ identifies value-add opportunities for developers, whether they involve raw land or creative redevelopment locations.

Whether you are exploring new commercial real estate opportunities or are interested in expanding, our team will guide you through the nuances of the market to help achieve your business or financial goals. Get in contact here to learn more.